Correlation Between Amg River and Guidemark(r) Small/mid
Can any of the company-specific risk be diversified away by investing in both Amg River and Guidemark(r) Small/mid at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Amg River and Guidemark(r) Small/mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amg River Road and Guidemark Smallmid Cap, you can compare the effects of market volatilities on Amg River and Guidemark(r) Small/mid and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Amg River with a short position of Guidemark(r) Small/mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg River and Guidemark(r) Small/mid.
Diversification Opportunities for Amg River and Guidemark(r) Small/mid
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amg and Guidemark(r) is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Amg River Road and Guidemark Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Smallmid Cap and Amg River is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Amg River Road are associated (or correlated) with Guidemark(r) Small/mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Smallmid Cap has no effect on the direction of Amg River i.e., Amg River and Guidemark(r) Small/mid go up and down completely randomly.
Pair Corralation between Amg River and Guidemark(r) Small/mid
Assuming the 90 days horizon Amg River is expected to generate 1.35 times less return on investment than Guidemark(r) Small/mid. But when comparing it to its historical volatility, Amg River Road is 1.38 times less risky than Guidemark(r) Small/mid. It trades about 0.19 of its potential returns per unit of risk. Guidemark Smallmid Cap is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,960 in Guidemark Smallmid Cap on November 8, 2024 and sell it today you would earn a total of 71.00 from holding Guidemark Smallmid Cap or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amg River Road vs. Guidemark Smallmid Cap
Performance |
| Timeline |
| Amg River Road |
| Guidemark Smallmid Cap |
Amg River and Guidemark(r) Small/mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amg River and Guidemark(r) Small/mid
The main advantage of trading using opposite Amg River and Guidemark(r) Small/mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amg River position performs unexpectedly, Guidemark(r) Small/mid can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Guidemark(r) Small/mid will offset losses from the drop in Guidemark(r) Small/mid's long position.| Amg River vs. Amg River Road | Amg River vs. Champlain Small Pany | Amg River vs. Amg River Road | Amg River vs. Marsico Global Fund |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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